Tag: recovery

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Stagflation is the best danger to Europe’s restoration

Stagflation is the greatest risk to Europe’s recovery

Former Italian Prime Minister Mario Monti told CNBC on Saturday that he believed the greatest threat to Europe’s economic recovery from the coronavirus pandemic was “stagflation”.

Monti, now president of Bocconi University in Italy, said the “huge bulk” of central banks’ expansionary monetary policies and government fiscal incentives put in place to support economies amid the coronavirus pandemic “could well trigger more inflation.”

At the same time, Monti said there were “a number of restrictions on the flexibility of production” that needed to be increased.

Generally speaking, stagflation is when the rate of inflation is high, but economic growth is slowing and unemployment continues to rise.

The IHS Markit Flash Composite purchasing managers’ index for the euro zone, which tracks activity in manufacturing and services, hit a two-month low of 59.5 in August, compared with 60.2 in July. A value above 50 still means that economic activity is expanding, but many economists have suggested that dynamism in the region may slow down.

Former Italian Prime Minister Mario Monti will perform on “Porta a Porta” on October 11, 2018 in Rome, Italy.

Massimo Di Vita | Massimo Di Vita Archive | Mondadori portfolio | Getty Images

There are also concerns about the impact of supply chain problems from Asia affecting manufacturing in Europe, as well as the fact that higher wages could lead to inflationary pressures.

Speaking to CNBC’s Steve Sedgwick at the European House Ambrosetti Forum on Saturday, Monti said that economies, not just in the EU, may begin to experience elements of “stagflation”, similar to what happened in many countries in the 1970s.

As a result, Monti said it was “very important to manage this transition from a needed abundance of financial and financial support to a simpler situation with caution and in a coordinated manner.”

Preliminary data released on Tuesday showed that inflation in the eurozone hit a 10-year high in August, with consumer prices up 3% year over year.

The European Central Bank will hold its next policy meeting on September 9th to discuss the way forward for its asset purchase program. However, analysts told CNBC earlier this week that they expect the ECB to suspend its announcement of tapering its Covid stimulus measures until December.

– CNBC’s Silvia Amaro contributed to this report.

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World News

Saudi Aramco posts close to 300% leap in Q2 revenue on international demand restoration

Saudi Aramco posts near 300% leap in Q2 profit on global demand recovery

The Saudi Aramco logo is pictured at the oil facility in Abqaiq, Saudi Arabia on October 12, 2019.

Maxim Shemetov | Reuters

Saudi state oil giant Aramco reported a staggering 288% increase in net income to $ 25.5 billion for the second quarter, while maintaining its dividend of $ 18.8 billion amid large oil prices from higher prices and a rebound benefit from global demand.

Aramco’s net income of $ 25.5 billion for the quarter compared to $ 6.6 billion in the same quarter of 2020. Earnings exceeded expectations, with analysts posting an average net income of $ 24.7 billion for the quarter expect.

“Our second quarter results reflect a strong recovery in global energy demand and we are moving into the second half of 2021 with more resilience and flexibility as the global recovery picks up,” said Amin Nasser, President and CEO of Aramco, in an am Corporate statement published on Sunday.

Aramco said net income for the first half was $ 47.2 billion, compared to $ 23.2 billion in the first half of 2020, an increase of 103%. The company said the results were supported by easing Covid-19 restrictions around the world, vaccination campaigns, stimulus measures and accelerating activities in key markets.

“Although the challenges posed by Covid-19 variants are still uncertain, we have shown that we can adapt quickly and effectively to changing market conditions,” said Nasser.

Dividend plans

Aramco said free cash flow was $ 22.6 billion for the second quarter and $ 40.9 billion for the first half of 2021, compared to $ 6.1 billion and $ 21.1 billion, respectively. Dollars in the same time periods in 2020.

This is significant because free cash flow has now risen above the $ 18.75 billion quarterly dividend for the first time since the pandemic began. Aramco already pays the world’s largest dividend, but the improving outlook has led some analysts to call for higher payouts.

“A dividend hike is needed to stay competitive,” BofA analysts said in a research note ahead of the results. “Higher oil prices and OPEC + -driven production increases should support a significant increase in free cash flow over the next few years,” she added.

Aramco responded that its dividend would remain at “normal levels” for the quarter but would “advise” later on whether to stick to its current payout schedule.

“We’re looking at our sustainability program,” Nasser told CNBC on Sunday’s conference call. “Many of the elements of our capital program that we are currently considering have to do with crude oil-to-chemistry and hydrogen, and all of these programs offer great opportunities, particularly with the Shareek program,” he added.

Aramco, which is majority owned by the Saudi Arabian government, is an important source of income for the kingdom. “All of this will be reviewed with our board of directors and we will decide on an additional dividend payment at a later date,” said Nasser.

Price outlook

Oil prices soared around 40% to around $ 70 a barrel in 2021, prompting major oil rivals BP, Chevron and Royal Dutch Shell to raise dividends and launch share buyback programs.

“We assume that the recovery will continue,” said Nasser. “We’re seeing more economies opening and we expect demand to be around 99 million barrels by the end of the year … and 100 million barrels next year as a forecast for aggregate demand,” he added.

Amin Nasser, CEO of Saudi Aramco, gesticulates during a panel meeting on the third day of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, January 23, 2020.

Jason Alden | Bloomberg | Getty Images

Aramco also said it lowered its gearing ratio – essentially how much the company is debt-financed to equity – to 19.4% on June 30, down from 23% on December 31, 2020. The decrease was mainly due to higher cash and cash equivalents and stronger operating cash flows and proceeds related to Aramco’s most recent crude oil pipeline transaction.

“Our historic $ 12.4 billion pipeline deal was an endorsement of our long-term business strategy from international investors and represents a significant advance in our portfolio optimization program,” said Nasser.

Capital expenditures were $ 7.5 billion for the second quarter and $ 15.7 billion for the first half of 2021, up 20% and 15% respectively. Capital expenditures are expected to be around $ 35 billion in 2021, according to Aramco.

Saudi Arabia’s Crown Prince Mohammed bin Salman said the kingdom would sell more Aramco shares earlier this year, but the company made no comment on the plans. Aramco also briefly stopped commenting on a previously announced oil-to-chemicals deal with Indian conglomerate Reliance Industries, which is expected to be formalized later this year.

“We are advancing a number of strategic programs that focus on sustainability and low carbon fuels, maximizing the value of our assets and driving our downstream integration and expansion,” added Nasser.

“For all of these and other reasons, I am very positive about the second half of 2021 and beyond.”

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Politics

Janet Yellen Warns That Coronavirus Variants Threaten World Restoration

Janet Yellen Warns That Coronavirus Variants Threaten Global Recovery

VENICE – Treasury Secretary Janet L. Yellen said Sunday she was concerned that coronavirus variants could slow global economic recovery and called for urgent efforts to accelerate vaccine use around the world.

Your comments on the conclusion of a meeting of Finance Ministers of the Group of 20 Nations came when the highly contagious Delta variant of the coronavirus triggered outbreaks among unvaccinated populations in countries like Australia, Indonesia, Malaysia and Portugal. Delta is now also the dominant variant in the USA.

“We are very concerned about the Delta variant and other variants that are emerging that could threaten recovery,” said Ms. Yellen. “We are a networked global economy. What happens in any part of the world affects all other countries. “

Many cities and countries have begun declaring victory over the pandemic, easing restrictions and returning to normal life. But Ms. Yellen warned that the public health crisis was not over.

She said the world’s top economic officials spent much of the weekend in Venice discussing how they could improve vaccine distribution with the goal of vaccinating 70 percent of the world by next year. Ms. Yellen noted that many countries have successfully funded vaccine purchases but lack the logistics to get them into people’s arms.

“We have to do more and be more effective,” she said.

The proliferation of variants has begun to dampen optimism about the course of the recovery.

Capital Economics analysts announced this week that they intend to cut their economic growth outlook for the year to below 6 percent.

The proliferation of new varieties of coronavirus has “raised doubts about the pace of real economic growth in the second half of this year and beyond,” wrote Paul Ashworth, chief economist for North America at Capital Economics, in a research note.

The International Monetary Fund said it was sticking to its 6 percent global growth forecast this year, but warned that growth would be stifled in developing countries where infection rates are skyrocketing.

“The divergence between economies is worsening,” said IMF Managing Director Kristalina Georgieva on Saturday. “Essentially, the world is facing a two-pronged recovery.”

Some finance ministers also raised concerns over the weekend that variants and slow vaccine uptake could turn the recovery on its head. This concern was highlighted in the Group’s joint statement as a downside risk to the world economy.

“The only hurdle on the way to a quick, solid economic recovery is the risk of a new wave of pandemics,” said French Finance Minister Bruno Le Maire. “We all need to improve our vaccination performance.”

The IMF Executive Board last week approved a plan to provide $ 650 billion in reserve funds that countries could use to buy vaccines and fund health initiatives.

Ms. Yellen said she urged her group of 20 colleagues to expedite the “fair” delivery and distribution of vaccines, diagnostics and therapeutics to ensure that low- and middle-income countries could fight the virus flare-up.

Policy makers at the weekend’s meeting also spent time focusing on new investments in preparation for future pandemics. Ms. Yellen said that while this is important, more needs to be done in the short term.

“Variants certainly pose a threat to the entire globe,” she said.

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Health

New Covid outbreaks a high danger to financial restoration, OECD chief says

New Covid outbreaks a top risk to economic recovery, OECD chief says

Covid-19 vaccinations without prior registration will be given at Sector 30 District Hospital in Noida, India on June 22, 2021.

Sunil Ghosh | Hindustan times | Getty Images

New outbreaks of Covid-19 remain one of the greatest risks to a global economic recovery, warned the Secretary-General of the OECD, calling on developed countries to support less developed countries with their vaccination programs.

“We have to do what we can to get as many people as possible around the world to vaccinate. There is a special responsibility for developed economies and it is not just about charity or charity, it is actually both a matter of self-interest “to keep our people safe … and to ensure that economic recovery is sustainable” said Mathias Cormann, Secretary General of the OECD, on Thursday.

“New outbreaks are still one of the biggest downside risks to the ongoing economic recovery,” he told CNBC’s Annette Weisbach.

“There is a race between vaccinating as many people as possible around the world, including and especially in developing countries, and the risk of new variants emerging and variants that may be resistant to the vaccines currently available,” he noted.

Read more: Covid-19 has destroyed 22 million jobs in advanced countries, according to the OECD

It is not only Cormann who fears that the continued spread of Covid-19, especially the latest highly transmissible Delta variant in younger and unvaccinated people, could destroy an economic recovery.

French Finance Minister Bruno Le Maire told CNBC on Tuesday that “the only thing that could jeopardize France’s economic recovery is a new wave of the pandemic”.

On Wednesday, the World Health Organization reiterated its call for wealthy nations to help poorer countries by sharing Covid vaccines, especially for health and care workers and the elderly.

Global minimum tax rate

The coronavirus pandemic may be the most pressing problem for global public health, but governments have now turned to other pressing matters, including international tax reform.

In June, treasury ministers from the most advanced economies known as the Group of Seven backed a US proposal requiring companies around the world to pay at least 15% income tax.

Last Thursday, US Treasury Secretary Janet Yellen announced that at least 130 nations had agreed to a global minimum tax on companies, part of a broader agreement to revise international tax rules.

Cormann said the deal was urgently needed, noting that “131 countries have reached an agreement on an internationally consistent path to fair taxation. Globalization and the digitization of our economies led to efficiency distortions and serious inequalities in our tax system and companies did not pay their fair share of taxes where they should. “

“We now have an agreement whereby the winners of globalization, including and especially the major digital multinationals, would pay their fair share of taxes or pay their fair share of taxes once (the deal) was in the markets in which they operate are implemented. “Their profits.”

He noted that all 131 countries have agreed that the global minimum corporate tax rate should be 15%, as have those in the group of 20 developed countries. “This underpins tax competition worldwide.”

Some low corporate tax countries like Ireland and Hungary have concerns about the deal, but Cormann said they were involved in the negotiation process: “Some countries seem to be starting from a different position,” he noted, “but 131 out of 139”. Counties (members of the G20 / OECD Inclusive Framework working together on tax reform) are on board and this is an important milestone. “

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Politics

Search shifts from rescue to restoration

Search shifts from rescue to recovery

Search and rescue teams continue to work in the rubble of the collapsed Champlain Towers South apartment in Surfside, Florida on July 6, 2021.

Eva Marie Uzcategui | AFP | Getty Images

Searching the site of a Florida condo building collapse has shifted from a rescue operation to a salvage operation as the likelihood of finding survivors decreases, Miami-Dade County Mayor Daniella Levine Cava said at a news conference Wednesday afternoon.

For two weeks, rescue teams have spent a painstaking search and rescue effort to find more victims in the rubble of the collapsed Champlain Towers South in Surfside, Florida. But the possibility of finding someone alive is “near zero,” according to Surfside Charles Mayor Burkett.

Levine Cava also announced that the death toll has risen to 54, of which 86 are not yet known.

“I couldn’t be more proud of our team. The extraordinary men and women from here, at home and from around the world who have given this search everything they have every day,” said Levine Cava.

“At this point we have really exhausted all of the options available to us on the search and rescue mission. Today is about beginning the transition to recovery so we can help finish the families who are suffering and waiting for us. “

The transition from rescue to salvage will be at midnight tonight and will be marked by a moment of silence in front of the construction site with first responders and faith leaders, Levine Cava added.

Search and rescue teams were able to reach areas of the pile that were inaccessible prior to the building’s demolition on Sunday evening without first responders injuring despite difficult conditions at the site, Levine Cava said.

The building was demolished in a controlled demolition on Sunday amid concerns that the standing structure was unstable and could fall on first responders.

Weather conditions cleared Wednesday so rescue teams could continue their search efforts despite initial concerns about having to temporarily suspend work, Levine Cava said in the morning. Forecasters downgraded Elsa from hurricane to tropical storm on Wednesday after hitting land on Florida’s northern Gulf coast.

The emergency management department has received 42 resource requests from citizens affected by Tropical Storm Elsa, with Lt. Gov. Jeanette Nuñez experienced more than 26,000 power outages.

More than 10,000 employees are ready to respond to these failures and provide resources such as water, food and generators, added Nuñez.

After a brief stop to tear down the standing rubble, search and rescue workers will continue to work in the rubble of the partially collapsed 12-story Champlain Towers South apartment on July 5, 2021 in Surfside, Florida.

Giorgio Viera | AFP | Getty Images

Surfside Vice Mayor Tina Paul said authorities are working to find long-term housing for survivors of the condominium collapse, many of which are still staying in hotels.

“That is also a priority just to rebuild their lives,” Paul said. “The best way to start is to have a home to call your own.”

Paul added that authorities have received several inquiries from board members and condominium presidents regarding the safety of their buildings. The City of Surfside issued a press release calling for a geotechnical survey of properties more than 30 years old, but Paul said better recommendations are being developed.

Levin Cava also said Miami-Dade County continues to move forward with a 30-day audit that evaluates all four-story residential properties that are 40 years or older and “have not completed the process of identifying and resolving issues.”

The county assessed a total of 40 buildings as part of the audit and identified one building with four balconies that was classified as unsafe according to Levine Cava. While the building was not being evacuated, the balconies were immediately closed.

The remaining portion of the partially collapsed 12-story Champlain Towers South Condo building is falling into controlled demolition on July 4, 2021 in Surfside, Florida.

Joe Raedle | Getty Images

Other cities, like North Miami Beach and Miami Beach, have also started conducting their own audits, she added.

“There will be changes, there will be improvements,” said Levine Cava.

Surfside Mayor Burkett also briefed on Champlain Towers North, the sister building of the collapsed condominium building. Engineers and authorities are currently checking whether it is safe for residents to live on the sister property.

Burkett said it would take several weeks to gather sufficient evidence of structural problems with the building.

The cause of the collapse of the apartment building is still unknown.

Recent evidence shows that the 40-year-old building showed signs of structural damage as early as 2018, with waterproofing problems under the pool and cracks in the underground car park.

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Health

Australia’s Covid restoration plans stay unsure as a result of delta variant

Australia's Covid recovery plans remain uncertain due to delta variant

A person exercises at the Sydney Opera House during a foggy start to the day on June 30, 2021 in Sydney Australia. Lockdown restrictions continue as NSW health authorities work to contain a growing Covid-19 cluster.

Brook Mitchell | Getty Images News | Getty Images

A recent spike in Covid cases has Australian authorities scrambling to contain the delta variant, which was first detected in India.

The country has handled the coronavirus pandemic relatively better than most, with fewer than 31,000 total cases due to strict social distancing rules, border restrictions, contract tracing and lockdowns.

Several major cities were locked down last week, including Sydney — the capital of Australia’s most populous state, New South Wales, and home to more than five million residents.

On Monday, New South Wales reported 35 new local cases as authorities clamp down on individuals and businesses for flouting restrictions. State Premier Gladys Berejiklian reportedly warned that the situation over the next couple of days would decide if the two-week lockdown in Sydney will be extended beyond July 9.

Last week, Australia’s national cabinet agreed to halve the number of international arrivals allowed into the country by July 14 as part of a four-phase recovery plan. Non-residents are mostly barred from entering the country, with few exceptions.

Prime Minister Scott Morrison said a trial program would allow some vaccinated travelers to self-isolate at home, in an effort to reduce the pressure on Australia’s quarantine system.

Australia is still in the first phase of its plan, which emphasizes vaccines and social restrictions to minimize community transmission, according to the cabinet’s assessment. The next three phases would be post-vaccination, consolidation and, lastly, the reopening of borders.

Uncertainty remains

The federal recovery plan needs more precision, which would provide greater certainty for Australian businesses looking to reopen, according to Jennifer Westacott, CEO of the Business Council of Australia.

“We need some really clear targets. We need some really clear threshold. We need those to be realistic,” she said Monday on CNBC’s “Squawk Box Asia.”

“Business can start planning. Airlines can start planning. Small business can start planning. We need a little bit more precision,” she added.

Many businesses, including farmers, rely on international labor. Prolonged border closures mean there’s a shortage in manpower at least until 2022, when borders are tentatively scheduled to reopen.

Westacott said Australia’s recovery plan should take a staged approach and allow more skilled international workers in to fill vacant positions as the vaccination rate increases.

“We can’t wait for 2022 to get skilled workers in the country,” she said, adding that such a delay means Australia’s “capacity to ramp up slows down, but it also means that companies just don’t do stuff here.”

Sluggish vaccine rollout

Mixed messaging around the AstraZeneca vaccine from the Australian government and the advisory board that advises the health minister on vaccine issues in the country has been “really problematic,” according to Archie Clements, pro vice-chancellor of the health sciences faculty at Curtin University.

“If you look at the vaccine rollout statistics, the rate of increase in vaccines slowed through June and I do think that’s largely down to the mixed messaging around AstraZeneca,” he told CNBC’s “Street Signs Asia” on Monday.

The Australian Technical Advisory Group on Immunisation prefers that people below 60 are given the Pfizer vaccine — which is in short supply — to avoid the risk of an extremely rare blood clotting disorder related to the use of AstraZeneca shots. The government, meanwhile, says those people can opt for AstraZeneca after consulting their doctors.

“The federal government should have backed AstraZeneca very strongly from the very beginning, really should have been promoting it. It is a very safe vaccine,” Clements said, pointing out that only a minuscule number of people have had a severe reaction to the shot.

“We should be encouraging everyone to get vaccinated and to take the vaccine that’s available to them, regardless of whether it’s AstraZeneca or Pfizer,” he said.

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Health

Journey.com, AirAsia and Oyo on tourism restoration from Covid

Trip.com, AirAsia and Oyo on tourism recovery from Covid

Ramping up vaccination rates for Covid-19 will help boost the recovery in the travel and tourism industry, a panel of experts told CNBC.

Vaccination is the only comprehensive way to fight the impact of the coronavirus, Ritesh Agarwal, CEO and founder of Indian budget hotel chain start-up Oyo, told Nancy Hungerford during the virtual CNBC Evolve Global Summit on Wednesday.

Global travel and tourism took a massive hit last year and many airlines are still struggling to stay afloat. The coronavirus pandemic shut down borders and suspended most international travel. With vaccination rates picking up, especially in the West, many countries are slowly opening up their economies and borders.

“I believe travel is here to stay. Domestic travel will lead the recovery but vaccination is the only comprehensive and conclusive way of resolution,” Agarwal said.

Oyo, a SoftBank-backed start-up, saw its daily bookings for the summer season more than double in Europe where the vaccination rate is relatively high, according to the CEO.

Travelers tend to book rooms in hotels where the staff have been inoculated, he said, adding that Oyo provides certificates to show their staff have been vaccinated, Agarwal said.

Asia’s vaccination drive

Where vaccination rates are concerned, some of the more populous countries in Asia have comparatively fallen behind their counterparts in Europe and the United States.

Information collated by scientific online publication, Our World In Data, showed that as of June 15, 40% of North Americans have received at least one dose of Covid vaccine and 36% in Europe. In comparison, only 21% received at least one shot in Asia, though the pace of vaccination is picking up in the region.

AirAsia chief executive Tony Fernandes said he remains very optimistic about vaccination rates, especially in Southeast Asia.

“The distribution is there, the demand is there, and now supply is becoming consistent,” he said, adding that he expects most Southeast Asian countries to reach a vaccination rate of 60% for a first dose by September.

I believe travel is here to stay. Domestic travel will lead the recovery but vaccination is the only comprehensive and conclusive way of resolution.

Ritesh Agarwal

CEO and founder, Oyo

But he is less upbeat about the possibility of an internationally recognized vaccine passport — a digital app on a smartphone that can access an individual’s health data to confirm if they have been vaccinated against Covid-19.

Support for digital health passports is split. Critics point to concerns over how secure a person’s data will be, as third-party apps will be communicating with databases containing sensitive personal health information.  

What the travel industry needs, however, is consistency around regulation, according to the budget airline boss.

Passengers crowd at Wuhan Railway Station on the first day of the Dragon Boat Festival holiday on June 12, 2021 in Wuhan, Hubei Province of China.

Zhao Jun | Visual China Group | Getty Images

“If you have got two vaccines, you don’t need to quarantine. That seems to vary country to country,” he said. Nations should also accept all vaccines that have been approved by the World Health Organization, Fernandes added.

Major trends among travelers

Domestic travel is already picking up in countries like China that have brought the pandemic under relatively good control. Cases have remained comparatively low while the vaccination rate climbed.

Millions of people rushed to travel last month during a five-day Labor Day holiday in the country as bookings for hotels, car rentals and other travel soared.

Jane Sun, CEO of Chinese travel booking site Trip.com, said that she is looking forward to a strong rebound for domestic travel in China. “We have seen strong pent-up demand through the data of our search volume,” she said.

Sun explained there are three trends being observed among those who are traveling again since the start of the pandemic.

First, they are booking more with hotels, airlines and local operators who are providing masks, hand sanitizers and other safety measures. Second, people are now traveling in much smaller groups. Finally, they are choosing packages with flexibility, that allow them to change, cancel or postpone their trips.

AirAsia’s Fernandes agreed that the current situation required operators, including the low-cost carriers, to adapt and offer more flexibility to travelers — even if it may not be a sound business decision.

“There’s too much uncertainty,” he said, adding that the airline may bring back some of its older, more strict policies once there is more certainty in travel.

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World News

Commerce secretary on commerce, restoration from Covid

Commerce secretary on trade, recovery from Covid

Hong Kong’s economy has rebounded sharply after being hit by the Covid-19 pandemic — but it’s not out of the woods yet and some sectors are still reeling, said the city’s top trade official.

“The distribution of this rebound is rather uneven,” Edward Yau, Hong Kong’s secretary for commerce and economic development, told CNBC’s “Squawk Box Asia” on Thursday.

Yau explained that imports and exports have been a “very strong catalyst” of growth in the last few months, with overall trade hitting record levels in some months. However, retail sales are moderating and tourism is still struggling to recover, he said.

Such uneven economic performance is also reflected in the jobs market, and will likely remain so as Hong Kong faces the “twin battle” of containing the spread of Covid and reviving the economy, added Yau.

The Hong Kong economy grew 7.9% in the first quarter of 2021 compared to a year ago. It was the city’s first economic expansion after six consecutive quarters of year-on-year contraction.

A man wearing a protective face mask stands on Kowloon’s Tsim Sha Tsui waterfront that faces Victoria Harbour in Hong Kong.

Anthony Wallace | AFP | Getty Images

Before the pandemic, Hong Kong — a Chinese-ruled semi-autonomous region — was rocked by widespread pro-democracy protests that turned violent at times. The unrest sent the economy into a recession in 2019 for the first time in a decade, driven by a steep decline in retail sales and tourist arrivals.

The Covid outbreak dealt another blow to the economy.

While retail sales have recovered since February this year, the pace of growth has slowed down. Meanwhile, visitor arrivals into Hong Kong have remained weak.

Yau said it’s encouraging that the number of daily Covid cases has fallen and stayed low in Hong Kong over the past month. That would allow more segments of the economy to recover, but fresh waves of infections could still occur, he added.

“The lesson we learned is try to shorten the time to suppress the outbreak,” said Yau, adding that the ability to do so will help instill confidence among individuals and businesses.

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Business

Defying Critics, Biden and Federal Reserve Insist Financial Restoration Stays on Observe

Defying Critics, Biden and Federal Reserve Insist Economic Recovery Remains on Track

“We should be on our way to a fantastic American comeback summer, full speed ahead,” said Senator Mitch McConnell of Kentucky, the Republican leader, on the chamber floor this month. “From vaccinations to job growth, the new Biden administration has inherited favorable trends in all directions.”

“But in several ways, the choices made by the Democratic elected have helped slow the return to normal,” he added.

Critics have also questioned the wisdom of the Fed’s commitment to keeping interest rates low and buying bonds even as prices begin to rise. Pennsylvania Republican Senator Patrick J. Toomey said last month that while the Fed “claims this inflation spurt will be mild and temporary,” it “may be time for the central bank to consider the alternative.”

Mr Biden’s advisors say they continue to monitor the risk of consumer prices rising, forcing a swift policy response that could curb economic growth. They say these risks remain small and that they see no reason to change course on the president’s agenda, including the proposed infrastructure and social programs that the president claims will prop the economy for years to come. That agenda could prove to be tougher, even among Congress Democrats, if employment growth continues to disappoint and inflation rises higher than expected.

Fed officials also remain intrepid. They show no signs of a rate hike anytime soon and continue to buy $ 120 billion worth of government bonds every month. Officials have only given the earliest indications that they may tip toe off this emergency policy. They argue that their job is to manage risk and the risk of early aid withdrawal is greater than the risk of the economy overheating.

“I don’t think it would be good for the industries we believe will be successful if the recovery continues so that we can complete this recovery early,” said Randal K. Quarles, Fed vice chairman of oversight, at a hearing of the House of Representatives committee this week when lawmakers pushed it on looming inflation. The Fed is independent from the White House but is responsible for keeping prices in check.

The voters give Mr. Biden good marks for his previous economic responsibility. A solid majority of Americans – including many Republicans – support the president’s plans to levy taxes on high wage earners and businesses to fund new spending on water pipes, electric vehicles, education, childcare, paid vacations, and other programs Conducted by online research company Survey Monkey through May 9th.

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Health

France’s Le Maire says peace and safety in danger if African Covid restoration left behind

France's Le Maire says peace and security at risk if African Covid recovery left behind

French Finance Minister Bruno Le Maire on Wednesday warned that peace, security and global stability are in danger if the world’s economic superpowers do not contribute to Africa’s economic recovery from the Covid-19 crisis.

African leaders met in Paris over the past two days in a summit convened by France to strike a multibillion-dollar “New Deal” to aid the continent’s economic and health revival.

The Summit on the Financing of African Economies brought together 21 heads of state from Africa and leaders of continental organizations along with European leaders and the heads of major international finance organizations. In a press conference Tuesday night, French President Emmanuel Macron said the summit had yielded “a New Deal for Africa and by Africa.”

The signatories called for an additional $650 billion of IMF Special Drawing Rights to be released to close the gap between developed and emerging economies. However, only $33 billion of this has been earmarked for African countries and European leaders have vowed to donate their own shares in order to bring the total for the continent close to $100 billion.

The IMF may also contribute some of its gold reserves and in a joint communique after the summit leaders suggested that “flexibility on debt and deficit ceilings” could be used to further alleviate the burden.

G-7 and G-20 urged to contribute

Le Maire indicated on Wednesday that the French government would be pushing for greater contributions from other major economies at the upcoming G-7 (Group of Seven) summit in the U.K. in mid-June, and would also be reaching out to the G-20.

“Developed countries have invested more than 25% of their GDP to fight against the consequences of the crisis and to engage a very strong economic recovery. In Africa, it is less than 2% of their GDP,” Le Maire told CNBC’s Steve Sedgwick, adding that this trajectory risked a great divergence in the recoveries of economies and health care systems.

Workers transport the second shipment of the Johnson & Johnson Covid-19 coronavirus vaccine upon its arrival at the O R Tambo International Airport in Johannesburg on February 27, 2021.

Kim Ludbrook | AFP | Getty Images

“This would be a very important danger not only from an economic point of view, but a real danger for security, for peace, for stability, for illegal immigration, so I really urge everybody to be aware of the current situation of the African countries and to be aware of the necessity of putting more money (into) Africa.”

He suggested that rather than just deploying grants, governments should look to invest in small and medium-sized enterprises, supporting African entrepreneurs who are “at the core of the economic recovery.”

Despite maintaining comparatively low Covid-19 infection and death rates compared to the rest of the world, sub-Saharan Africa is projected by the IMF to have experienced a 3.3% decline in economic activity in 2020, the region’s first recession in 25 years. GDP growth projections for 2021 also lag significantly behind the rest of the world’s 6% estimate.

The drop in activity is expected to cost the region $115 billion in output losses this year and could push another 40 million people into poverty, effectively wiping out five years of progress against poverty.

In Tuesday’s press conference, Macron also set a goal to vaccinate 40% of the population of Africa by the end of 2021, calling the current situation both “unfair and inefficient.”

‘Vaccine apartheid’

The summit has urged the World Health Organization, World Trade Organization and the Medicines Patent Pool to remove intellectual property patents blocking the production of certain vaccines.

IMF chief Kristalina Georgieva cautioned on Tuesday of dire global economic consequences if the vaccine rollout fails in developing countries and the health crisis continues.

South African President Cyril Ramaphosa on Wednesday told France24 that he welcomed the group’s call for major economies in the northern hemisphere to share their vaccine supplies.

“They have a huge surplus and we have no access, and that to me is vaccine apartheid and it can also be characterized as vaccine imperialism,” Ramaphosa said.

“We will never be able to defeat the pandemic, Covid-19, if we try to defeat it in the northern hemisphere only and not in the south.”

A landmark proposal to waive intellectual property rights on Covid-19 vaccines was jointly submitted to the World Trade Organization by India and South Africa in October.

Several months on, however, it continues to be stonewalled by a small number of governments. These include the U.K., Switzerland, Japan, Norway, Canada, Australia, Brazil, the EU and — until recently — the United States.